Supplier tax settings - PO header tax overwriting item tax 1

[johnhugh]

Hi, I'm using Accpac 6 and am trying to get my tax settings right.

For PO Invoices, am I correct in saying that the vendor tax class in the header need to be the same as the item tax class, otherwise Accpac won't calculate any tax?
Is there a way of making Accpac calculate the tax based on the vendor tax only?

In the below example I have set up the vendor with a withholding tax of 10%. This tax however is not calculated, because the item tax class defaults to tax class 1.
I have 2 different tax rates for Withholding tax - 10% and 15%.
Even when changing my supplier tax class 1 to be 10%, it would not work when another supplier has a Withholding tax of 15%.
What is the best solution to have tax calculated automatically when having different tax rates?

Supplier Tax

Item Tax

 

[ettienne]

I have seen a lot of confusion about the taxes in Accpac, but they are really simple... don't overthink it.
The taxes are a matrix of vendor tax vs item tax. The default tax class for vendors and items is 1.
I normally setup items with 2 tax classes: (1) taxable and (2) non taxable. The default for items will then be taxable, unless you set the item's tax class to 2.
For vendors you can setup different tax classes for the different tax rates, include a tax class for non taxable.

In the Tax Rates setup screen the picture will be clearer, in the item tax class 2 row (non taxable) the tax rate will always be 0. In the item tax class 1 row (taxable) the tax rate will be the applicable rate for the vendor tax class in each column.

 

[johnhugh]

Thanks Ettienne. Very helpful!

Do you then have to add your tax authorities in the item setup screen under taxes?
And if so, do you have to add all authorities (different currencies) under there as well?

 

[johnhugh]

Actually I think I got it now.
To answer my own question I don't think I need to add tax classes to items at all.
I set up the items tax as taxable or not taxable only and the tax rate comes from the supplier tax settings.

Are my settings below correct. The yellow highlighted field as well?

 

[ettienne]

Yes your taxes setup are correct.
To the previous questions: no do not add the tax authorities to the item setup, unless you want to set a specific item tax class for an item other than the default of 1.
Lets say you have an item that is a service charge that is always non taxable, you can then set the tax class for that item to 2 and it will then default to non taxable when you purchase or sell the item.

 

[johnhugh]

Thanks again!

 

[johnhugh]

Sorry to start this up again, but the above does not seem to work for A/R invoices.
Is my set up wrong still?
In my A/R invoice it should calculate 3% Witholding Tax but item tax class suddenly defaults to 2 instead of 1.
I thought it always defaults to 1 unless specified otherwise?
The A/R summary invoice gets entered in A/R directly and does not come from O/E.

 

[ettienne]

Go to IC Items and look at the Taxes tab. If there are any tax records there then check that the correct tax class has been set for Sales Tax Class. If there are no tax records then it will default to 1.

 

[johnhugh]

Hi Ettienne,
The invoice was entered in A/R directly as a summary invoice. No IC items on the invoice.

 

[ettienne]

AR Setup Options, Transactions, Default Detail Tax Class to 1 > check the box.

 

[johnhugh]

Brilliant! Works!
I would have never thought of looking for a checkbox under options.